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Are today’s college families buying at the top of the price chart?

by Grace

The economic realignment of education will . . . most likely take place in the next five to ten years.

According to Frank Ryan, the higher education bubble has burst.  If this is true, families with children now in college are buying at the top, just like the unlucky homeowners who bought at the peak of the last housing bubble about five years ago.

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Evidence for this pending “collapse of the education systems” includes soaring tuition costs, record student loan debt, escalating loan delinquency rates, declining college enrollment, and Moody’s negative financial outlook for the higher education sector.  There will be winners and losers in the coming years, with “marginally profitable schools, or schools with high debt loads which depend upon taxpayer support”, finding it difficult to survive.

Ryan’s outlook for the next ten years:

First, to stem declining enrollment, tuition will decrease.  Schools will struggle to maintain enrollment and in order to cover their fixed cost will be forced to reduce tuitions to encourage students and enrollment.

Second, faculty tenure and burgeoning cost of academic instruction will come under question and will be changed.  While existing tenured faculty will probably not be affected, the probability of getting tenure for other professors will be significantly more difficult, except at well-funded academic institutions.  Pay will likely decline as well.

Third, entire educational institutions will begin to file bankruptcy.  There has already been a major bankruptcy of a university in Atlanta, Georgia.  Other institutions that are not well-funded will meet the same fate.

Fourth, it is very obvious that academia will be forced to justify its cost relative to the value garnered from the education.  This will be one of the first times in history that the value of education relative to the cost will come under scrutiny.

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Posted on June 18, 2013 at 5:47 am in higher education bubble, rising costs of college   |  RSS feed

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13 Comments to “Are today’s college families buying at the top of the price chart?”

    
  1. zzzzzz
    June 18, 2013 at 7:18 pm

    One thing not mentioned is the increasing size and cost of university administrations. Perhaps this sort of financial pressure will reduce that.

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  2. CSProfMom
    June 19, 2013 at 6:14 am

    Yeah, I noticed that too. And the quote about tenure becoming more difficult? Tenure has already become close to impossible. In many fields, there are very few tenure track positions. Most courses are taught by non-tenure-track people. I don’t think schools are going to find cost savings there. They need to hit the administration, and the burgeoning student services area. That is where the money is.

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  3. Grace
    June 19, 2013 at 10:58 am

    Yup, I would think that all those bloated administration staffs would see cuts if there’s any hope of tuition costs coming down.

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  4. Grace
    June 19, 2013 at 11:01 am

    Maybe tenure will disappear completely except for tippy-top schools and other special circumstances. Even if it has become close to impossible, I believe tenure is still around at most traditional schools.

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  5. CSProfMom
    June 19, 2013 at 11:58 am

    I am not sure why conservatives focus so much on eliminating tenure when that is not what drives the costs. Makes me think that ideology rather than true focus on costs is the driver….

    Anyway, although I am not a fan of the tenure process, I cannot think of any other way of organizing things that wouldn’t end up pushing our higher ed system into something much more like K12. Given that most people think that our current higher ed system is far better than our K12 system, I cannot imagine why anyone, liberal or conservative, would want that. Eliminating tenure and going to an all-adjunct system would certainly save money but would also
    1) make student evaluations far more important than they even are now, meaning that standards would further decline
    2) put all control in the hands of the administrators, who tend to be the ones pushing educational fads and fluff since they do not have education in the content areas.
    3) mean that far more administrators would have to be hired, since adjuncts can’t do the service work that faculty currently do. I know I spend about a third of my workweek on tasks such as advising, curriculum development, filing assessment reports, and doing industry outreach. Even now, a big reason for the explosion in administrative numbers has been the increase in the numbers of adjuncts teaching.
    4) no one would be left to get outside funding, which not only would impact the bottom line, but would mean a huge loss of innovation. You may not realize this, but a lot of funded research happens at non top-tier schools. In particular, many regional universities are economic engines in their little corners of the world, with faculty working with local companies on projects, doing outreach and providing subject expertise to the K12 schools, and often working extensively with poor communities in the region.

    Some people advocate eliminating tenure but keeping longterm contracts for fulltime people. That might work, but I doubt it would save money – in fact, costs might go up because salaries would have to rise to compensate for the loss of tenure. If salaries don’t go up, the risk is that many schools would be only able to attract mediocre people, especially in STEM fields. We all know that is a big problem in K12. And if student evaluations were part of the evaluation process, there would still be downward pressure on academic standards. If administrators controlled the evaluation, there would be more pressure to adopt educational fads that do not necessarily work in the content areas, again much as has happened in K12.

    It continues to baffle me why conservatives want higher education to be more like K12.

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  6. Grace
    June 19, 2013 at 1:55 pm

    Ryan’s inclusion of tenure in his piece didn’t seem excessive. And considering that tenure is a cornerstone of K-12 teaching structure, I don’t see how the argument that preserving tenure in higher education saves it from “pushing our higher ed system into something much more like K12” is a very strong one.

    Simply wanting to eliminate tenure at all levels does not logically lead to the conclusion that “conservatives want higher education to be more like K12”, from what I can tell.

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  7. CSProfMom
    June 19, 2013 at 2:36 pm

    Tenure in K12 is a very weak beast compared to the higher ed system. As you know, it is pretty much automatic, which is not the case at all in higher ed. Tenure evolved in K12 as a means to prevent political cronyism, not to protect academic research and shared governance. In K12, governance is not shared, whereas it is a central tenet of higher education. You can’t have shared governance without tenure or something pretty much like it. If the faculty serve at the whim of the administration, there is no shared governance. My point is that eliminating tenure would cause the higher education system to become much more like K12 in that it would be administrator-driven rather than faculty (and content area) driven. That seems to be what conservatives want, and I don’t understand why.

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  8. Craig P. Anderson
    June 19, 2013 at 8:24 pm

    I also believe increased federal scrutiny will become a major issue for traditional colleges and universities. More thoughts here: http://wp.me/p39TSX-2j

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  10. Grace
    June 20, 2013 at 6:24 pm

    I would welcome increased federal scrutiny since those are my tax dollars that are involved!

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  11. Grace
    June 20, 2013 at 6:28 pm

    zzz – That Berkeley Memorial Stadium sounds like a big “whoops”.

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  12. gasstationwithoutpumps
    June 20, 2013 at 7:38 pm

    The Berkeley stadium was not an “oops”—it was a deliberate extraction of money from the University by the athletics teams, who feel entitled to all the money the university has. No one with half a brain expected the seat sale scam to be able to cover the debt, but administrators and Regents bend over backwards to please the athletics boosters (the head coaches are the highest paid University staff).

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  13. Grace
    June 21, 2013 at 12:01 pm

    Well that’s even worse!

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